Ladies and gentlemen thank you for standing by and welcome to Global Payments Third Quarter 2020 Earnings Conference Call. [Operator Instructions] And as a reminder today's conference will be recorded. At this time I would like to turn the conference over to your host Senior Vice President Investor Relations Winnie Smith. Please go ahead.

Good and welcome to Global Payments third quarter 2020 conference call. Before we begin I'd like to remind you that some of the comments made by management during today's conference call contain forward-looking statements about expected operating and financial results. These statements are subject to risks uncertainties and other factors including the impact of COVID-19 and economic conditions on our future operations that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in filings with the SEC including our most recent 10-K and subsequent filings. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call and we undertake no obligation to update them. Some of the comments made refer to non-GAAP financial measures such as adjusted net revenue adjusted operating margin and adjusted earnings per share which we believe are more reflective of our ongoing performance. For a full reconciliation of these and other non-GAAP financial measures to the most comparable GAAP measures in accordance with SEC regulations please see our press release furnished as an exhibit to our Form 8-K filed this morning and our trended financial highlights both of which are available in the Investor Relations area of our website at www.globalpaymentsinc.com. Joining me on the call are; Jeff Sloan, CEO; Cameron Bready, President and COO; and Paul Todd Senior Executive Vice President and CFO. Now I'll turn the call over to Jeff.

Thanks Winnie. We delivered third quarter results that substantially exceeded our expectations because of our differentiated strategy and technology enablement to drive digital growth. Each of adjusted net revenue, adjusted operating margin and adjusted earnings per share significantly outperformed the targets we put in place post the pandemic outbreak and we continue to gain share relative to our markets. We thank our team members for their hard work and dedication to our customers to each other and to the communities in which we live and work during these most difficult times. We are particularly pleased with the significant level of operating margin expansion that we generated in the quarter. These results validate the actions we took at the beginning of the outbreak of COVID-19 both in timing and quantum. As a result we are delighted to have returned to earnings growth in the third quarter of 2020. Our expectations are for continued progress in the fourth quarter, providing meaningful momentum heading into 2021. We are also pleased to continue to make substantial progress on our strategic goals this year, extending our lead and deepening our competitive moat. Year-to-date we entered into a landmark collaboration with Amazon Web Services, our preferred provider of cloud services for our issuer business, across the 60% threshold of our business coming from technology enablement the goal we set in March 2018 for year-end 2020 and purchased an additional 29% of our joint venture in October with CaixaBank in Spain and Portugal, two of the most attractive domestic markets in Europe. And we did all this during a once-in-a-century pandemic while meaningfully expanding market share by signing marquee competitive takeaways including Truist the sixth largest bank in the United States and by extending relationships with some of the largest most sophisticated and complex financial institutions worldwide…

Thanks Jeff. I'm extremely proud of the financial performance we achieved this quarter that once again exceeded our expectations driven by strong execution of our differentiated technology enabled strategy. Adjusted net revenue for the quarter was $1.75 billion, reflecting growth of 64% over 2019. Adjusted net revenue compared to the prior year on a combined basis was down just 4%, a meaningful improvement from the second quarter. Importantly, our adjusted operating margin increased an impressive 250 basis points to 41.1% as we benefited from the broad expense actions we took to address the impact of the pandemic and the realization of cost synergies related to the merger, which continue to track ahead of plan. The net result was adjusted earnings per share of $1.71 for the third quarter, which compares to $1.70 in the prior year period, an impressive outcome that highlights the durability and resiliency of our model. These results include an accrual for nonexecutive bonuses as our performance for the quarter substantially exceeded our expectations. We are pleased to be in a position to begin to reward our team members around the world who continue to deliver the highest standard of service to our customers. In our Merchant Solutions segment, we achieved adjusted net revenue of $1.13 billion for the third quarter, a 6% decline from the prior year on a combined basis and significant improvement from the second quarter. Notably, we delivered an adjusted operating margin of 47.3% in this segment, an improvement of roughly 40 basis points as our cost initiatives and the underlying strength of our business mix more than offset top line headwinds from the macro environment. Our technology enabled portfolio was relatively resilient once again with several of our businesses delivering year-over-year growth in the third quarter on a combined basis. Specifically our…

I am very proud of all that we have accomplished thus far in 2020, as we execute on our strategic initiatives. This will be a remarkable year regardless of the macroeconomic environment, but it is all the more notable in the face of a 100-year pandemic. AWS, CaixaBank and crossing a 60% digital enablement threshold, just to name a few of the noteworthy accomplishments. Our new collaborations with market-leading technology companies such as AWS combined with distinctive partnerships with some of the largest and most complex institutions in the world such as HSBC, CIBC and CaixaBank provide further validation of the wisdom of our differentiated strategies. We are enthusiastic about the future, as we continue to advance our technology-enabled software-driven goals building upon our competitive advantages to widen our moat and to create significant long-term value for our shareholders. Winnie?

Before we begin our question-and-answer session, I'd like to ask everyone to limit their questions to one with one follow-up to accommodate everyone in the queue. Thank you. Operator we will now go to questions.

Thank you. Your first question comes from the line of Darrin Peller with Wolfe Research. Darrin, your line is open.

All right. Hey, thanks, guys. Jeff, I just want to start off with your strategy around acquisitions and really the technologies and capabilities you really think you can use to fill out what's already obviously showing to hold up – hold its own pretty well. And then just on top of that any data points you can give us on how you're kind of filling the funnel on the top in terms of bookings new business trends in the merchant business versus any attrition levels would be great. Thanks.

Thanks, Darrin. It's Jeff and I'll start. I'm sure Cameron and Paul can comment on your second question. But on your first question listen our strategy has not changed the company probably over the last number of years and that is to say that we have three legs to the stool. Those legs to the stool include owned and partnered software, include e-commerce and omnichannel businesses and exposure to faster growth market. So I'd say pretty much all the deals that we look at fall into one or more of those three buckets. We're really pleased about where we are today. And Paul of course mentioned this in his prepared comments is that we sit here today in a healthy position as we've ever been but particularly much healthier than we would have guessed probably back in March or April. As Paul said, there was never a day on a net basis 2.5 times and we have $3 billion of liquidity. Our M&A pipeline is pretty full. But obviously some of that depends on some stability of course in the capital markets. So you saw our announcement today about our Board thankfully increasing our share repurchase authorization. For the time being the best investment I think is us given our performance and where the markets have been. Having said though we continue to execute against that pipeline and we're well capitalized to pursue those opportunities. So I think we're in a really happy place Darrin. And I would say our strategy has not changed and you probably saw this in our release as well as our prepared comments. We've actually now crossed the 60% threshold of our merchant business coming from digital trends which is something that we started talking about in 2015 and 2018. We set that target in our last Investor Day in 2018. For the end of this year we crossed that threshold in the third quarter. So I think that's been working really well for us. I don't really see that changing. And if we were to do additional acquisitions subject to market conditions they would probably fall on lines of those three buckets. So Cameron, do you want to talk a little about the second question?

Yes, sure. Darrin, good morning. I'll touch on that. I'm going to focus on North America, since that represents about 80% of our merchant business. But I would tell you the one thing that we tried to do during the midst of the pandemic is focused on the things that we can control and that starts with new sales. And I would say the new sales performance across our businesses have really been exceptional. Heartland had a record new sales production period in the third quarter, up double-digits year-over-year, up 25% sequentially versus the second quarter. Again, the strongest new sales performance period in the history of that business. Our integrated business as we noted in our prepared comments is tracking to budget for the year notwithstanding the pandemic. New partner production is up 70% year-over-year. And I would say the overall partner pipeline is as strong as it's ever been in that business. And we're pretty optimistic about the momentum we have heading into Q4 and 2021 in our integrated channel. In vertical markets, we saw a particular strength in AdvancedMD. That's a continuing theme obviously we touched on throughout the pandemic. Their new bookings were up 15% year-over-year. In Xenial, our QSR enterprise business. We saw new SaaS sales up 30% year-over-year. In our higher education business, new bookings are tracking at a consistent level with 2019, despite a number of campuses being closed during the midst of the pandemic. So we're pleased with that performance as well. Canada saw new sales up 12% year-over-year in the quarter – or excuse me year-over-year, year-to-date, they're up 28% in Q3. So again, continued strong strength in the Canadian market largely on the heels of our new partnership with Desjardins, which continues to bear free for us in that market. In Europe and Asia, overall, I'll just touch on briefly. I think their performance has been very strong, notwithstanding the environment they've been operating in. New sales remain solid in all those markets. The U.K. has had some significant new wins this quarter that we're particularly pleased with. Spain continues to be a strong performer for us. Midtown is up in Spain year-over-year. Domestic volumes are up, 5%, 6% in Spain year-over-year. We see particular strength in that market as well. And then Asia, again new sales performance has been very good. Obviously, the overall macro in Asia continues to be a bit soft given the impact of the pandemic. But I would say just overall in the business going back to my opening comments, we are exceptionally pleased with the pace of new sales and how we've executed with new sales and bookings throughout the pandemic but particularly in Q3.

That's really helpful, guys. Great detail. I mean it sounds like – and I'll leave it at this but it sounds like overall the technology offerings you have is enabling. You guys can gain share to a degree that you come out of the pandemic potentially larger or in line or larger than you could have been before. Is that fair just based on the type of differentiation you're seeing versus maybe some of the banks out there?

Yes. I think we're certainly – our opinion you look at Visa and Mastercard just right Darrin, which on a combined basis I view as kind of the market and these numbers obviously are multiples better, than those numbers. So with that, that I think supports our thesis that, we're rapidly gaining share in pretty much every one of our businesses, as we look at it especially for these purposes our merchant business. So I think what you said is exactly right. And that in addition to the bookings numbers which are great leading indicators that Cameron alluded to, make us feel really good about the trajectory of the business.

Yeah. It's fair to say. All right, thanks guys.

Thanks, Darrin.

Thanks, Darrin.

Your next question comes from the line of Dave Koning with Baird. Dave, your line is open.

Hi. Thanks and nice job.

Thanks Dave.

Yeah. And maybe, could you review monthly trends in -- especially in merchant maybe -- I know you did down 6% year-over-year. But did that improve throughout the quarter? And maybe how is that setting up into October?

Yeah. So maybe I'll start. And Cameron, can give a little more insight. Yeah, the monthly trends continue to kind of have good both stabilization and kind of sequential monthly growth and so, we had said for some time now that, from a merchant standpoint our volumes looked a lot like the Visa credit volumes. But most recently started positively decoupling from those volumes and trending better. And we saw that obviously in the third quarter, relative to the Visa volumes that came back yesterday. And we're continuing to see that, improvement in the several weeks here of October that we've seen so far. So yeah, the trends continue to be positive. The financial kind of how we've described them. And obviously the results flow-through from those relative to the financial performance for the quarter. Cameron, do you want to add to that?

Yeah. I would just add a couple of things. I think if you look at Q3 results, obviously continued improvements throughout the quarter. I think the pace of recovery, as we've seen over the last couple of months has begun to slow. And I think that's pretty consistent with the industry data that has been published as well. We see October trending a little bit better than September. But as it relates to the exit rate for September, I think it's important to look at the merchant business in a couple of ways. One is, if you exclude our vertical market businesses that have been most heavily impacted during the pandemic, lower indication where schools are largely closed, our active business where obviously insurance and sporting events have been largely shut down and gaming where obviously our casino business has been heavily impacted, by the pandemic. If you exclude those, our merchant business for the quarter in the U.S. was roughly flat, down a point or so. So I call that roughly flat, for the quarter. And Asia is -- September essentially flat. So I think we have good momentum, heading into October in that business. And obviously that's a strong sequential improvement, over where we were in the second quarter. So, certainly as it relates to North America again, which is 80% of the merchant business, the trends we've seen are positive. October is a slight improvement over September. We're obviously monitoring that closely as I think the entire world continues to struggle with the pandemic. But the trends we've seen thus far are encouraging, as we continue to grind higher as a recovery matter heading into 2021.

Great. Thanks and just a quick follow-up. Normally in Q4 merchants, the seasonality of merchant is for revenues to come in a little bit sequentially and margins to be down a bit. But given kind of the recovery that's playing out and all the synergies, could we decouple kind of from that normal seasonality, or should we still have a little bit of it?

Yeah. No. I think in the environment we're in, we would see some of the decoupling from that normalcy. And actually sequential quarter improvement, both from a revenue standpoint and a margin standpoint, particularly on the margin side given the cost actions that we're taking. So, that kind of normal kind of seasonality doesn't necessarily hold this year, given the pandemic.

Sounds great. Hey thanks guys.

Thanks, Dave.

Thanks, Dave.

Your next question comes from the line of Ramsey El-Assal with Barclays. Ramsey, your line is open.

[Technical Difficulty] merger revenue synergies realization and kind of your thoughts on any challenges or opportunities coming from the impact of the pending, sort of what are your latest thoughts on prioritization and timing of the revenue synergies realization coming out of the merger?

Yeah Ramsey, we missed the first part of your question. But I think it relates to what we're seeing from a merger synergy standpoint on the revenue side. How that's pacing? And what our expectations are, as we continue to push forward. So I would say we're very pleased with the early progress we've seen, from a revenue synergy standpoint, as evidenced at least partly today by our re-iterance of our expectation of $125 million of annual run rate synergies by the time we get to three years out from the closing of the merger. We've launched a number of initiatives in our merchant business, to realize those synergies today. Tactically we are cross-selling our analytics and customer engagement platform now across the TSYS base of business. We've introduced vital plus, into the Heartland channel. We've also brought that solution to Canada as well. We're leveraging the capabilities of ProPay now in the Heartland business. We're also bringing that to Canada. Those revenue synergies are well on track and pacing relatively consistent with our original expectations for them, notwithstanding obviously the impacts of the pandemic. There's longer tail revenue synergies, obviously that continue to progress as well. A number of those are really focused on our ability to cross-sell, our issuing solutions into our base of existing merchant-FI relationships outside of the U.S. I would say those discussions continue to be very fruitful and are progressing. Obviously the pandemic has had some impact on the pace of those conversations. But we remain very optimistic and bullish, as it relates to our ability to be successful in cross-selling issuer into those relationships. And vice versa, we're having a number of conversations today about new merchant relationships that could come from existing TSYS issuing FI partnerships outside of the U.S. as well. And then lastly, we're making great headway on what we would characterize as our transaction optimization opportunities, where we can better blend the capabilities of our issuing and acquiring business to deliver unique distinctive solutions to the marketplace. A lot of that focus continues to be on Europe, in markets outside of the U.S. And I think we're reasonably optimistic that we'll have some positive news to announce on that in the coming months. So I would say, all in all, we're delighted with the progress we're making. We continue to track well against those synergy targets. I'm more optimistic today than I was at the beginning of the merger as it relates to our ability to drive revenue synergies from the combination. And I would say, the early success we're seeing is very positive.

That's great. That's terrific. One follow-up from me. I just wanted to ask about margins. The outperformance in the quarter was obviously great to see. Can you talk to us about the drivers of the beat this quarter and how they'll compare to what we're going to see next quarter? You mentioned a potential incremental margin expansion next quarter. Is this more from synergies realization? Is it just operating leverage as the business comes back online? Just any commentary on the color – on the drivers of the beat this quarter and what might be flowing in the next quarter will be helpful?

Yeah. Sure. Ramsey, it's Paul. I would characterize it as both better kind of optimization from the synergies. As we talked about, we raised our synergy target to $375 million. So we are seeing kind of better realization on the synergies front. We clearly achieved the $100 million of run rate cost takeouts relative to the pandemic, and so we're seeing that benefit come through. And just in general, as we're getting incremental revenue, the incremental margins of that revenue is coming in at a higher incremental rate than we had originally planned, because we kind of locked down the expense base. So it's really those three drivers. I would say, as it relates to fourth quarter and the margin expansion there specifically talking about the merchant segment, when I referenced kind of the expansion there I would also say, and I mentioned this in the prepared remarks, the margin expansion we would have had this quarter would would've been higher had we not used some of the excess incremental revenue at the incremental margin to set aside for accrual non-executive bonuses. So, actually on a core fundamental basis margin performance was actually even better than the 250 basis points that we realized.

Perfect. Thanks so much for taking my question.

Thank you.

Our next question comes from the line of Bryan Keane with Deutsche Bank. Bryan, your line is open.

Thanks. I just wanted to follow-up Jeff and asked about the M&A pipeline. There's a lot of people trying to speculate on what deals you guys would look at. In particular, I guess I'm trying to understand your preference between a scale kind of a cost synergy versus looking at a growth asset that would supplement your growth rate or even take it higher. Just any thoughts on a preference between those two types of assets?

Hey, Bryan thanks for your question. It's Jeff. So let me just start with the criteria that, we always apply to kind of every deal, and then I'll work backwards to kind of address your question more directly. So, as you said for some time, we look at strategic fit, cultural fit and financial returns, when we look at new mergers and acquisitions very few things that we look at actually meet all three of those hurdles. And I would tell you that, we vary the financial return hurdle based on risk not surprisingly which includes geographic and country risk, and also will reflect the volatility that we see in the capital markets currently and that may or may not persist time will tell. As I said a minute ago, given what I just said at current price levels, we believe buy back our stock is really a compelling opportunity. Hence, the announcement today of the share repurchase, increment authorization and a return on capital allocation which we put on hold in March when COVID initially started. I'd also say another corollary coming out of what I just said is, most of our focus now in our pipeline as Paul said most of our focus now is on deals in the United States. So if you look at the criteria listed and you think about macroeconomic risk, country risk, regional risk and everything else, it shouldn't be a surprise to anyone that unless pricing environments drop our focus is largely within the United States market, which is about 70% of the company. So that probably shouldn't surprise anybody. As it relates to scale versus growth assets, look our pipeline is still with both of them. What I would tell you at the end of the day though is I think it's unlikely in the immediate term that we do something outside the United States. Within the United States, we're looking at both software assets as well as traditional processing assets. But if nothing changes from here, I would expect us to do more repurchase. You should be candid at these prices, and less inorganic investment. But obviously that's subject to the facts. And as the facts change our opinions will change. The other thing, I want to mention in response to your question as Paul said is, at 2.5 times net leverage and $3 billion of liquidity we got plenty of financial firepower to do what we need to do on our own. Should we need access to additional capital, and we have a use of proceeds for it, then obviously we'll revisit the composition of our businesses. But I would say sitting here today, we think we're particularly well capitalized to execute on our strategies. I don't see us shedding in the assets to do that absent the distinct use of proceeds, which we don't have today.

Well, that's super helpful. Thanks for that color. And just as a quick follow-up. On the Issuer Solutions business, it seems like it's trending well and came in kind of a little bit ahead of where we were looking for, just thinking about the outlook there and the pipeline and issuer, if you could make some comments there? Thanks so much.

Yeah. Bryan, I'll start. I'm sure Paul can contribute also, but let me just start. So I would say, it's a real bright spot as you said sequentially pretty significant improvement, return to better growth in the third quarter ex the commercial card, which is largely corporate travel related as Paul described in his prepared remarks. Look, our pipeline is full. I think we've said in our prepared remarks, 11 deals in our pipeline. Seven of which are competitive takeaways, in the last 18 months 33 competitive wins. So, it's hard not to look at that and be really pleased with how we're executing. And some of these we mentioned initially, our AWS collaboration, which is unique to us, really starting to bear fruit. We've had our first joint win in Asia, and that's someone going competitive takeaway from someone else from a legacy provider into a cloud-based environment coming in 2021. So, now we have market validation from a customer base as to how we're doing. And our strategy there is a little bit different than everybody else is. So if you look at our strategy in Issuer, which is bearing fruit, it's to marry great technology with folks like AWS, to marry that with servicing the largest and most complex financial institutions globally. And the reason we go after that market base, and it's not to the exclusion of everything else, but the reason we go after that market -- that place in the market is that, those are the folks who are gaining share in their own right. So as they gain share we gain share with them. And I don't think you have to look further than announcements, for example, that Cap1 has made, and other folks over time about picking up additional portfolios, to see that we're successful when our partners are successful. So that's why our focus is where it is. So, we're pretty optimistic in that business. Obviously some of that depends on the macro. As I think Paul pointed out in his commentary, and you look at the Visa and Mastercard numbers last night, our business was -- I mean someone can do the math, but it's six times better than the market rates to growth or whatever the math was embedded in the Visa, Mastercard commentary last night. So ex T&E low-single-digit growth, with T&E in there and commercial card minus two whatever it was. But that compares to whatever they've done last time minus 7% and minus 12% or wherever the revenue was minus 14% and minus 17%. So, clearly, I think we represent the market on issuing. And I think it goes to show the length of differentiation, the unique value play that we have the value-added services like fraud analytics and loyalty in our businesses and that stuff obviously is winning. Paul, do you want to comment on that?

Yeah. Yeah, I would just say this that, we are going to see continued growth there and the recovery with that is happening in that business is very good from a top line standpoint. I would say the other thing is the efficiencies, we're getting that business to get 500 basis points of margin expansion this quarter just speaks volumes to how we're managing the cost base in the environment we're in. And then finally, we're doing all that in an environment where we're investing in modernization as Jeff just talked about. So, really kind of hitting all three levers of the business of the growth side from the top line, the new wins, the pipeline, the cost base efficiency, and then investing to position the business for the future.

Got it. Thanks so much and congrats on the progress.

Thanks, Bryan.

Your next question comes from the line of David Togut with Evercore ISI. David, your line is open.

Thank you. Good morning. Good to see the major initiatives in Europe, particularly the reestablishment of the HSBC JV and going up to 80% on la Caixa. I'm curious, why move forward on both of these initiatives now. And does control of the la Caixa JV allow you to do things that you couldn't do previously?

Yeah. Dave, it's Jeff. I'll start and I'm sure Cameron will comment as well. So listen, those businesses are both performing really well in the current environment. I think you have to parse out the nature of our business in Europe relative to the nature of the markets themselves or in particular Visa and Mastercard's proxies for the market. So, our business is in those markets, which is to say, Western Europe or the U.K. and Spain and Portugal, have a very heavy domestic component in those markets. And our businesses are growing there absolutely on a domestic basis year-over-year, and I'm thinking about Caixa particularly and cross border while a piece of our business is a relatively small piece of our business and is nowhere near the driver of revenue growth that you have in Visa and Mastercard. So, to answer your question from my point of view, we have fantastic partners in HSBC and Caixa. Using the networks as a proxy, we're growing leaps and bounds, ahead of where they're growing in those markets our ability to invest, and capture more share in those businesses. Cameron talked about the bookings totals in some of our markets. We've had really good results in terms of new sales in those business. Businesses well in Spain, for example, we're growing absolutely year-over-year into October on a domestic basis. So, I actually think it's a fantastic time for us to continue to invest in those businesses and support our partners.

Yeah. I agree with that Dave. I don't have a ton to add. I would say I don't think there's ever a bad time to extend a relationship with a partner like HSBC, someone that we've worked with over 50 years in our business in some form or fashion. And certainly for the entirety of our existence in the U.K. market, they're a fantastic partner. We have a number of initiatives from a digital engagement standpoint that align very well with what our strategy is in that market. And we've worked together extensively for years, and are delighted to have the opportunity to extend our existing relationship, and even broaden it into new avenues as we move forward in time. So, we're -- we could not be more pleased to have executed that with them. As it relates to Spain, I completely agree with Jeff's comments. Spain and Portugal are two of the most attractive domestic markets in Spain -- or excuse me, in Europe. As I mentioned previously, Spain returned to volume growth domestically in the quarter and that has continued in October even with some reintroduction of restrictions to impact or to combat the coronavirus spread. So we're delighted with the overall performance of that business. And certainly, as Caixa continues to look to expand in Spain as well through its merger with Bankia, we think there'll be incremental opportunities for us and obviously owning more of the joint venture, I think will yield better returns longer term as we think about that investment. So clearly the valuation that underpinned and the forecast has underpinned the valuation for that business reflects the environment that we're in today. We're outperforming that valuation in that forecast as we sit here today. And again any time you have an opportunity to invest further in a joint venture that's been as successful as ours has been with Caixa in Spain certainly we jumped at the opportunity to do it.

Understood. Just as a quick follow-up, if I could. You made a number of important announcements both in the current quarter and previously the 11 LOIs with the financial institutions globally. You've got the AWS partnership, the Truist win which you announced earlier this year. Can you help us dimension what this might mean for 2021 or 2022 revenue or earnings growth recognizing companies aren't giving guidance in this environment, but maybe give us some framework with which to think about it?

Yes. So David, this is Paul. I think we gave you a little bit of a framework to think about our thinking as it relates to 2021 with the adjusted earnings per share target that we have right now on our budgeting process of roughly $8. And so that's how we're currently thinking about next year. All of those things you just mentioned are obviously dynamics in that overall planning kind of cycle that we're in right now. But as it relates to the next year that's kind of the best indicator we can give you as to our thinking of what next year might look like assuming a much more normalized and kind of more normal operating environment.

Dave, the only thing I would add to that is just I think it gives us a lot of confidence around the momentum we have in the underlying business. The macro is the macro and the impact of the virus is what it is. And obviously that will eventually play out. But as it relates to how we're executing in the business the underlying momentum we have from a new sales product and servicing standpoint, I think it just gives us a tremendous amount of confidence as to directionally where the business is heading over time. And as the macro continues the recovery obviously that will bear out in the financial results that we produce.

Understood. Thanks very much.

Thanks Dave.

Your next question comes from the line of Ashwin Shirvaikar with Citi. Ashwin, your line is open.

Thank you. Hey Jeff, Cameron. Hi, Paul. Congratulations on the quarter. Good comments here. I want to actually start with something that you guys didn't quite dwell on your adjusted free cash flow almost $0.5 billion quite impressive -- are there one timers in there that help? What should we look for in the full year? And any comments on this net income to free cash flow conversion going forward?

Yes. So Ashwin -- yes this is Paul. As it relates to -- we've always had as our goal to kind of convert roughly 100% of adjusted earnings into free cash flow and we were right at that goal for the third quarter. As it relates to timing there's been any really unique timing items in the quarter that I point to. We always have timing things that kind of flow in and out of a quarter, but nothing that I would specifically call out. And yes as it relates to kind of the forward look we've said that kind of $1.6 billion to $2 billion run rate on a full year basis is kind of the job that we're producing against from a free cash flow standpoint. And if you look over kind of the last three quarters we're playing right in that zone. And so, it wouldn't mean anything else there. We continue to obviously manage our capital expenditures in a very efficient sort of way while still investing for growth of basic -- the initiatives that we've talked about. But there isn't anything from a unique kind of onetime standpoint than I would point to in the quarter.

Okay. Got it. So it's very good to hear the competitive wins continue. Any commentary on the pace of converting these wins to revenues? Are financial institutions merchants committed to promise time lines? Are they being pushed out maybe even pull forward given sort of strategic urgency? Any commentary on that that can have implications for the future?

Yes Ashwin there isn't anything really from an overall standpoint that I would say is changing the pace of patent realization of those opportunities. Obviously each client might have a different dynamic just always -- that always happens when you're dealing with clients. But there is one theme or any kind of a particular dynamic at play of either speeding up or slowing down kind of the normalized kind of realization of being able to get those opportunities converted into revenue. I would say from a conversion standpoint particularly on the issuing side which has the longest kind of cycle to bring those our conversion pipeline is relatively full. And so new opportunities are kind of being paced into that pipeline with that full nature. But there isn't any unique dynamic at play around acceleration or delaying of those opportunities.

And that would translate to good visibility I would imagine.

Yes.

Got you. Thank you.

Thanks.

Your next question comes from the line of Jason Kupferberg with Bank of America. Jason, your line is open.

Thanks, good morning guys. I thought I'd just follow-up on the comment around the targeting $8 of EPS for next year. I know, you said that assumes a more normalized macro environment, but I was hoping maybe you could outline just a little bit more about some of the expectations that are embedded behind that target. For example, would you have the flexibility to drive even more cost takeout if necessary to get there? Does it also assume some meaningful amount of capital deployment?

Yes. So Jason, obviously, we're in this budget process right now, and we obviously have always got a lot of dynamics at play, when we're in a budgeting process that kind of plays through various scenarios of what the revenue picture looks like and then, what the cost side looks like. And yes, we have obviously one set of plans as it relates to our cost initiatives. And then, under a different set of revenue assumptions, we would have a different set of plans. Do we have additional cost opportunities? The answer to that is, yes. There's always this balancing of the realization of cost opportunities with what that does on the revenue side. And all of this is kind of wrapped in the overall environment that we're operating in. And we're going to need the next obviously several months to kind of play itself out relative to the overall operating environment and we'll seek the cost base relative to that operating environment. But yes, I mean, I wouldn't give you any more color really than that other than the state that we are in our budgeting cycle and we play through all those dynamics in every year. This is a more unique year obviously, given the pandemic and the dynamics that play with the pandemic.

Jason, this is Cameron. The only thing I would add to that is it obviously assumes that the path run as it relates to recovery continues. And certainly, it doesn't anticipate a meaningful retrenchment, particularly as it relates to shutdowns or significant restrictions around commerce that we saw obviously earlier this year. So, it's not assuming heroic pace of recovery. It sort of assumes, we're continuing on the pace we're on today.

Okay. Okay. And just a follow-up on M&A, I mean I think historically, you guys have been pretty clear that, acquisitions need to be at least breakeven, but more likely accretive to year one adjusted EPS. So, is that still the case? And would you do a deal that actually dilutes your organic revenue growth, even if it gives you a lot of year one EPS accretion?

Yes. It's Jeff. Jason, the answer is no, we will not do that. So, we're very focused on our long-term model that we rearticulated and reaffirmed at the time of our partnership with TSYS about 1.5 years ago now. So, no, I don't see us doing deals that are dilutive to the rate of organic revenue growth. It doesn't make any sense to push a boulder up a further hill. I think, we've invested very substantially to get our business to be 60% technology-enabled. We're very pleased with the success of that strategy. You see in there differentiated results, which are multiples better than networks last night. I don't see us going backwards on that.

Okay. Thank you.

Thanks.

Your final question comes from the line of Andrew Jeffrey with Truist Securities. Andrew, your line is open.

Thank you. Good morning. Appreciate you -- excuse me at the end here. Jeff, you've spent a lot of time talking about your software technology-enabled businesses, which I think is a key differentiator. I wonder, if you could drill down a little bit in the hospitality where it seems like there's a tremendous amount of tech change, whether it's delivery order ahead with the QR code. You made a couple of comments about Xenial including the integration of Genius. I just wonder, if you could maybe flesh out a little bit volume growth in that vertical share gains, from whom you're taking share, where you think your competitive advantage is et cetera?

Yes. I'll start Andrew and I'm sure Cameron will comment as well. So listen, we're very pleased with our Xenial business. As you referenced, we gave additional disclosure today about how that business is performing. We did $62 million I think online orders as well as $1 billion of volume coming out of that business in the most recent period. I think Cameron commented on 30% increase in SaaS sales in that business in the most recent quarter. So, he can give you more detail, but we're very pleased about where that business is. But if you step back for a second, you tie us back the overall competitive landscape. I don't think there's anybody who's got the full stack of vertical capabilities that we do in that business. Our pipeline today, Andrew is filled with cross-sells in that business. So, we mentioned Dutch Bros, we mentioned Long John Silver's today in previous calls. We've mentioned RBI with Burger King, Popeyes et cetera. We've mentioned NENs and the folks that inspire our focused brands. So, we've got enormous pipeline in that business. I would say, it has changed a little bit and this is very good news for us and valuation of our strategy is that, in the last six months or so, we've been getting a lot of RFPs from either folks who are never customers of ours or exchange in that pipeline. And I think that's because they see what we're seeing, which is we call it the restaurant of the future, the QSR of the future, which obviously now includes safer commerce. But looking to RFP their payments business and these are businesses that are not with us today with competitors, who are primarily rightful shop payments companies. They look at RFP, their payments businesses and they're coming to us and I'm sure others and saying, can you do that while you're doing everything else that we need the QSR level including safer commerce. And I think that go-to-market with us Andrew is distinctive and unique to us. And that includes both competitive takeaways, being brand-new brands and we have 26 of the top 50 a day, but we don't have all of them. So, it includes brand-new brands, but also includes guys who are customers of us just for a portion of their business. So I think that cross-sell strategy is really working and we're very fortunate to be in that position we're in. Cameron, do you want to talk a little bit about some of the sub detail?

Sure. And I'll be happy to. I think Bryan [ph], it's important to segment the market as we always do here particularly in restaurant maybe more than other vertical markets. So, at the enterprise end, Jeff I think described well how we're positioned with Xenial and the success we're seeing with Xenial. I will comment obviously that the integration with Cayan really opens up the avenue for cross-selling payments into that channel. I think as you know SICOM the legacy business we acquired a couple of years ago had no real payment volume in that business. And by integrating Cayan in we're opening up a significant new avenue for payment cross-sell which is obviously consistent with our overarching strategy. As we move down market into the mid-market channel which we really attack through the Heartland business, we're delighted with the success we're seeing with our Heartland restaurant solution. That is geared towards what I would characterize as the restaurant mid-market channel. Sales of that were up 26% sequentially from Q2 20% year-over-year. We're continuing to see significant uptake of our software as a solution -- software as a service solutions through the point-of-sale system in that channel and could not be more pleased with the progress in the mid-market. And then lastly in the small end of the market, we introduced our omnichannel version of our registered product in this quarter which we sell into the small end of the restaurant as well as small end at just the merchant base more broadly. We're seeing uptake of that being particularly good as we integrate our online ordering capabilities into our traditional point-of-sale software solution for the small end of the market. So I think we have better product, better capability, better solutions across the spectrum of the restaurant vertical across all segments of that market, and I think as a result of that, we continue to win and we continue to take share in that channel.

All right. That's helpful color. And then one quick follow-up on the Issuer business. You mentioned a number of competitive wins. Could you just discuss -- are those takeaways from existing vendors or internal flips?

Yes, they're largely the former Andrew. We said that they will be we announced with our script this morning. So, Scotiabank in Canada was an in-sourcing model. So that actually is conversion in-sourcing and outsourcing. So, that's a flip from in and out. But other than that as I mentioned in the prepared remarks, seven of the 11 are competitive takeaways from existing providers. And the new one with AWS in Asia is also a takeaway from a legacy incumbent. So, the vast majority are takeaways, but Scotiabank will be the exception.

Great. Thank you.

Thanks very much. On behalf of Global Payments, thank you very much for joining us this morning.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.